Between
Gov. Rick Snyder’s call for a substantial business tax cut and a $1.8 billion state
overspending budget gap, lawmakers are looking for places to save. Many
both in and outside government are calling for lowering government employee
benefits to private-sector levels, so not surprisingly public-sector unions are
gearing up for a fight.

The
first offensive began with a media onslaught: “(T)he state’s largest teachers
union says school employee compensation is comparable to the private sector,”
wrote Peter Luke of The
Grand Rapids Press. His column reports that the Michigan Education
Association will “provide the data” during the upcoming budget debate that
shows the “total compensation” received by teachers is comparable to those in
the private sector. The MEA’s argument is that, when controlling for education
levels, public-sector employees may actually be underpaid compared to their
private-sector counterparts.

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However,
the unions rely on data from allies in academia and government who often look
only at salaries when comparing private- and public-sector compensation.
In fact, it’s skyrocketing public-sector fringe benefits that are behind much
of the disparity. “Total compensation” properly includes benefits like paid
leave, retirement contributions, health insurance and more. In each of these,
public-sector benefits tend to be far more generous.

Comparing
salaries while controlling for “education level” introduces additional
problems. For example, a virtual prohibition on merit pay in public schools
means that teachers employed by the government are much more likely to pursue
higher degrees because, along with additional years on the job, more
credentials are the only way for an individual to boost his or her pay level.
Many school districts even subsidize employees acquiring these extra academic
letters after their names, regardless of many studies showing that additional
degrees have little
effect on their classroom performance.

Finally,
their own self interest must be considered when assessing any pronouncements
from government employee unions on the relative generosity of public vs.
private sector compensation. Simply put, the MEA and its cohorts are in the business
of maximizing the amount of money transferred from taxpayers to its
members. Even school union bosses admit
that their job is not to serve the best interests of children, and
certainly not those of taxpayers. In contrast, lawmakers and the public they
are supposed to represent have a duty to pursue a much broader set of goals: to
get the most service, including the best education for children, at the least
cost.

At
the state level, employee compensation has risen 46 percent over the past decade;
that means Michigan taxpayers are shelling out an additional $800 million
every year. Local governments and public school employee costs have also sharply risen. Yet
the state has fewer workers, the schools have fewer students, and the test
scores of those students have stagnated, not risen. Few taxpayers
think they’re getting 46 percent more value from the state today than in 2001, or that
government and public schools are a “jobs bank” with taxpayers existing only to
serve those institutions’ employees.

The
government unions will do their utmost to sow confusion and muddy the water on
these issues, but the facts are clear: Government employees’ overall
compensation has risen steadily over the last decade, swamping any savings from
reductions in their numbers. A prerequisite for Michigan to get back on track
fiscally and economically is to put these benefits in balance.

Mackinac
Center research pegs the public vs. private fringe benefits imbalance at $5.7
billion annually. This is more than enough to balance the budget, eliminate
the Michigan Business Tax, fix the roads and still have money left over for
rainy days.

#####

Jarrett Skorup is research
associate for online engagement at the Mackinac Center for Public Policy, a
research and educational institute headquartered in Midland, Mich. Permission
to reprint in whole or in part is hereby granted, provided that the Center and
the author are properly cited.

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